English हिन्दी
Connect with us

Latest world news

Swiss Banks at the Losing End with Flight of Offshore Accounts

Published

on

Swiss National Bank

[vc_row][vc_column][vc_column_text]~Rashme Sehgal

There has been a large flight of capital from Swiss banks even prior to the introduction of the Automatic Exchange of Common Information (AECI) from 2018 signed by over 50 countries who are members of the Organisation for Economic Co-operation and Developments (OECD).

The Swiss banking system has paid a heavy price for handling these unaccounted for offshore deposits especially since several of the smaller Swiss banks had specialised in handling such deposits. The blanket of secrecy surrounding Swiss banking transactions had ensured could they look after deposits of largely unaccounted wealth from well-heeled clients across the globe including India. But this is not going to be the case any longer.

Pressure on the Swiss government to provide details of all account holders has resulted in the outflow of millions of dollars of deposits from these banks thereby causing many of the smaller Swiss banks to shut shop. One such high profile Swiss bank that was forced to file for bankruptcy was Hottinger and Cie which was founded in 1786.

A KPMG study showed that 30 per cent of private banks had recorded losses in 2014-15 which resulted in several thousand bankers being laid off from their jobs.

“The smaller private banks dealing with off shore accounts posted huge losses and the result was that bankers handling these account lost their jobs under the restructuring process,” pointed out Louis Tari, a Geneva-based banking and tax advisor.

“With the introduction of the AECI, information of all non-Swiss residents belonging to the OECD countries will be automatically sent to the federal tax authorities in Berne who in turn will despatch this information to the relevant countries. The authorities in these countries can in turn check if the account holder has declared his income or not,” Tari added.

Zurich based banker Hanspeter Baumgartner pointed out, “What is very significant is that Swiss banks have frozen all accounts of account holders with ‘black’ money informing these holders that they should either regularise their account in their country or else their asset will be frozen. The flip side is that Swiss nationals who had accounts in the Bahamas or in Panama have had to declare their accounts.”

“This has seen an influx of francs into Switzerland but the amount is not very large,” Baumgartner added.

The amount of money of Indian national in Swiss banks has been steadily declining and in 2016 amounted to a mere Rs 4482 crore according to data released by Switzerland’s central bank, the Swiss National  Bank. In 2015, the money deposed was Rs 8135 crore while in 2014 it was Rs 12,350 crore.

The figures being projected by the Indian government that billions of dollars had been stashed in Swiss banks by Indian citizens was largely overstated, analysts believe, as Switzerland never saw such massive deposits from any country.

Nathalie Bersier, a lawyer who works as a consultant for Swiss investments in India, said, “From 2009,  the Indian government has been highlighting the issue of black money without realising that the easiest thing to do  is for a client to close a bank account and transfer the money out. Such a flight of capital has already occurred.”

Bersier believes, “In Switzerland, two years ago the perception was that Indian assets were between $ 900 million to $4 billion. Today I would say, the amount would be less than even $900 million.”

“More than half the undeclared money from India that was stashed in Swiss banks has been moved to Dubai and Singapore from where it would have been invested in real estate, gold or re-entered India through the hawala route,” Bersier maintains.

Former Swiss state secretary for International Financial Matters Jacques de Watteville who had visited India in 2016 to negotiate with his counterparts in the Ministry of Finance had refused to hazard a guess about just how much money has been moved out of Swiss banks to be invested in Dubai or Singapore. “There are no official figures on the assets transferred out of Switzerland,” says Watteville.

While in India he had emphasised that, “Combating the menace of black money and tax evasion is also our shared priority. We discussed the need for an early and expeditious exchange of information to bring to justice the tax offenders.”

Many Indian analysts believe some of this money has been routed to the US with the US government actively encouraging foreigners to deposit money in US banks, no questions asked. Some US states and cities have emerged as veritable tax havens. 

South Dakota, to cite an example, has been described by some analysts as the ‘new Switzerland’ and mention of its role as a tax haven was emphasised in the Panama Papers which highlighted that US offshore assets remain anonymous.

The city of Delaware is also said to be another tax haven with over one million registered entities claiming to operate from there.

The fact is that while international disclosure rules comprising the AECI  have been accepted  by the OECD countries, thhe US has refused to accept them and is not a signatory to it. The US NGO Tax Justice Network has pointed out how the US does not practise what it preaches.

In fact, a Swiss financial analyst on condition of anonymity, has accused the US of having crushed Swiss banks. Since trusts can operate as shell companies in some US states, it is ironical that a Swiss trust company has gone ahead and opened an office in South Dakota. The analyst feels that some of the flight of capital from Switzerland has ended up in the US.

This is because while non-US banks and financial institutions across the world have to reveal American account details, this is not the case with US deposits by offshore account holders.

Bersier does not see too much emerging from the Federal Council consultations with the Indian government on the need to detect, recover and repatriate illegal deposits.

“The key issue is what pressure the Indian government can exert on the Swiss government,” says Bersier. “The US threatened to close all Swiss banks operating in the US which led to the Swiss immediately signing a treaty with the US and UK. There are no Swiss banks operating in India.”

On the subject of the AEOI Information between the Swiss and Indian governments expected to be operationalised by 2018, she remains equally cynical.

Erecting the AEOI platform is all very well, she feels, but it is too little too late. Berseir believes that by the time it becomes operational, all the illegal deposits will have been moved out. There are any number of countries where this money can be moved to.

While some signatories of the AEOI are committed to sharing information from 2017, others will start providing information from 2018. Till then, we have to wait and watch.[/vc_column_text][/vc_column][/vc_row]

Latest world news

Magnitude 7 earthquake strikes Tibet after floods

A magnitude 7 earthquake struck northern Tibet on Thursday, October 22. The tremor came weeks after deadly flash floods and landslides hit the mountainous region near the Nepal-China border. Initial reports did not confirm casualties or damage from the earthquake.

Published

on

earthquake-tremors

A powerful earthquake measuring magnitude 7 struck northern Tibet on Thursday, October 22, weeks after deadly flash floods and landslides devastated parts of the mountainous region near the Nepal-China border.

The earthquake struck the Nagqu region of Tibet, according to initial reports from earthquake monitoring agencies. The tremor occurred at around 10:33 pm local time in China, with the epicentre located in a county in northern Tibet.

The earthquake was reported at a depth of around 10 kilometres by China’s Earthquake Networks Center. The United States Geological Survey also reported the magnitude 7 tremor, placing its depth at approximately 18 kilometres.

There were no immediate confirmed reports of casualties or property damage following the earthquake, according to initial information available after the tremor.

Earthquake strikes northern Tibet

The earthquake occurred in the Nagqu region, approximately 400 kilometres from Lhasa, the capital of Tibet.

The tremor was recorded on Thursday evening, with monitoring agencies reporting slightly different estimates of its depth. China’s Earthquake Networks Center placed the epicentre at a depth of 10 kilometres, while the US Geological Survey reported a depth of 18 kilometres.

Further information about the earthquake’s impact was awaited at the time of the initial reports.

Tibet earthquake follows deadly flash floods

The earthquake struck weeks after devastating flash floods and landslides affected the mountainous region along the Nepal-China border in late August.

The earlier disaster followed an ice-and-rock avalanche near the border on August 26, triggering flash floods that swept through downstream areas. Homes, roads, bridges and power infrastructure were among the structures affected, while rescue and recovery operations continued in the aftermath.

The floods caused extensive destruction and left thousands of people dead or missing across the affected region, according to reports published after the disaster.

The latest earthquake is a separate event from the earlier avalanche and flooding disaster. An assessment of its effects was not immediately available.

Continue Reading

Latest world news

Macron rejects Trump’s immigration claims over France riots

French President Emmanuel Macron criticised Donald Trump and other foreign leaders over their comments on France’s recent unrest. Macron rejected claims that the country was being overrun by migrants and Islamists, calling such assertions false.

Published

on

French President Emmanuel Macron has criticised US President Donald Trump and other foreign leaders for their remarks about the recent unrest in France, accusing them of using the situation to advance their political agendas.

Speaking to reporters in Doha on Wednesday, October 21, Macron said foreign manipulation of information following the violence and looting had led to comments he described as “unacceptable” and “stupid”.

When asked whether he was referring to Trump, Macron replied, “Among others.”

The remarks came after Trump attributed the unrest in France to immigration and urged European countries to tighten their borders. Macron rejected claims that France had been overrun by migrants and Islamists, describing them as false.

Macron rejects claims linking unrest to immigration

Trump had argued that immigration was responsible for the violence in France, dismissing other explanations related to education and social concerns. He also urged Macron to close France’s borders, warning that the country faced serious consequences if it failed to act.

In a post on his social media platform Truth Social, Trump claimed that immigration had damaged France and called on the country to regain control of its borders.

Macron pushed back against this narrative, saying that some foreign leaders were repeating misleading claims about the situation. He also highlighted the circulation of artificial intelligence-generated images that depicted events he said had never taken place in France.

The French president said claims that the country had been invaded by large numbers of migrants and Islamists were “completely false”.

Macron argued that some politicians were using France’s domestic situation to support their own political campaigns, particularly as elections approach in their respective countries.

French minister offers to counter misinformation

French Foreign Minister Jean-Noel Barrot said his office could provide clarification to countries concerned about the situation.

He said the aim was to help prevent the spread or amplification of false information and unsupported claims on social media.

Macron also criticised those speaking negatively about France during the unrest, saying that foreign leaders should not exploit the country’s difficulties for political purposes.

Protests driven by rising living costs

The unrest followed demonstrations over rising living costs, inflation and concerns about public services. The protests initially involved students demanding more teachers and better school conditions before expanding to include trade unions and others concerned about economic pressures.

Violence and looting subsequently affected Paris and other French cities.

The French interior ministry estimated that 550,000 people took part in the nationwide demonstrations, while the CGT trade union put attendance at 800,000. The demands reported in connection with the demonstrations centred on living costs and public services rather than immigration.

The French government has faced pressure to prevent further violence, with additional demonstrations planned in the coming days.

Macron said France had the means to maintain order and indicated that a state of emergency was not necessary at that stage.

Continue Reading

Latest world news

Marco Rubio says India and US share extraordinary alignment on key issues

US Secretary of State Marco Rubio said India and the United States share an extraordinary alignment on core issues, even though disagreements between the two countries may arise.

Published

on

US Secretary of State Marco Rubio has described the relationship between India and the United States as one marked by an “extraordinary alignment” on important national interests, while acknowledging that the two countries may disagree on certain matters.

Speaking at a ‘Freedom 250’ reception in Mumbai on Tuesday during his visit to India, Rubio said the partnership between the two countries could play a significant role in shaping the 21st century. He emphasised the importance of cooperation between the two nations on issues that affect their respective national interests.

Rubio highlights shared priorities in the Indo-Pacific

Rubio identified the need for a free and open Indo-Pacific as a key area of common ground between New Delhi and Washington. He said both countries had an interest in ensuring that no nation claimed dominance over international shipping routes.

He acknowledged that disagreements between countries were inevitable but said the alignment between India and the US on core issues remained significant, particularly given the size and influence of both nations.

Rubio also described India as a powerful, influential and advanced country, calling it a strong geopolitical partner for the United States.

India-US relationship could shape the 21st century

Rubio said the partnership between the two countries could help shape the course of the coming decades. He pointed to shared values, including individual dignity, democratic principles and the rule of law, as common ground between the two nations.

He also noted that decisions being taken today on geopolitics, economics, trade and commerce would have consequences for future generations.

The US Secretary of State said he believed the relationship between India and the United States could positively influence what the 21st century looks like.

Trade ties remain an important part of the relationship

Rubio’s remarks come amid ongoing discussions between India and the United States over trade and other bilateral issues.

Earlier on Tuesday, he said the two countries were very close to signing a bilateral trade agreement, with a small number of outstanding points still to be resolved.

Trade relations have faced challenges over tariffs, India’s purchases of Russian oil and US immigration policies. Despite these differences, Rubio’s comments underscored Washington’s emphasis on the broader strategic partnership with New Delhi.

Continue Reading

Trending

© Copyright 2022 APNLIVE.com